malaysia must learn from singapore

malaysia has a lot of land and landed properties. and the rich have invested their savings in many properties. there is a huge temptation to jack up the prices of properties so that they can reap a huge profit from their investments, like in singapore, where a flat can cost half a million to several millions. even govt built flats can reach more than half a million on a 99 year lease. malaysia must curb this desire to push up the price of housing and ended up with high housing cost. once done it cannot be unwind without very nasty consequences. by keeping housing cheap, car cheap, and essential services cheap, it can keep the cost of living low. this will mean that it does not need to raise the cost of its labour and can remain compeititive in the international labour market. with a lower cost of living, there will also be lesser pressure on the people to demand for bigger pay packet. unlike in singapore, without a big pay packet there are just not enough to lead a decent lifestyle. but keeping a high pay packet, which is very necessary given the high cost of everything, it becomes uncompetitive. when the time comes for downgrading, many will suffer. malaysia must learn and not to repeat such a mistake at a national scale. it is very nice to hear of owning a multi million property. but it is a vicious circle and more is needed to keep up with that kind of price. at the end of it, it will price itself out of the market. the material worth of a person is not the dollars that he earns but how much can the dollar buys.


Speedwing said...

Hi Redbean

My recent visits to my beloved Segamat and then to my favourite city Kuala Lumpur reaffirmed my long belief that in Malaysia one can stretch money further. Even after converting RM to SGD, things are still cheaper in the north. In the foodcourts of KL, an average dinner is around RM4.50, which is 2 SGD. I was also quite surprised by the fact that there were so many Singaporeans in KL for their shopping and to spend their SGD.

Let us hope that Malaysia resist going down the route chosen by Singapore when it comes to property prices. I blame the situation here on property speculation by most Singaporeans. There are few Singaporeans I know of who haven't second, third or even fourth properties acquired for rental.

redbean said...

hi speed,

many important things are very easy to understand. you do not need a nuclear scientist to teach people how to count 1 to 10. you also do not need supertalents in every job.

i think we have misuse many of our supertalents, talents employed in the wrong fields or area are talents wasted. talents employed in the wrong area will deprived another who could to a better job with the appropriate talents.

and by emphasising on talents, as if talents is the cure all, we ended with many talented problems as a result of mismatching of talents.

we employed a priest to run a casino and the priest will say yes, make sure no one is allowed to gamble.

we employed a banker to run a stockmarket and the banker wants everyone to buy a stock and keep it for the next 20 years, like putting money safely in fixed deposits.

talents not applied will be talents wasted.

Matilah_Singapura said...

Er.. redbean. That's not how it works. Remember, the supply of land is fixed - but govts will release packets of land now and then for development.

The prices paid for land depends on how "popular" real estate is given that supply is constant) - therefore the amount of "popularity" will be reflected in the prices paid.

Unfortunately (or fortunately - depending on how you view and act in the world) money supply is generated by the govts central bank, and so are the interest rates. It is politically wise to artificially lower the interest rate by central bank action and govt fiscal policy.

Having a lot of "credit money" sloshing around is a sure way to artificially stimulate an economy - you see rising prices all around, especially in the stockmarket and real estate. This leads to credit bubbles - because the values of real estate and stocks are artificially inflated by all this debt money in the economy.

Asian central banks are notorious for inflation, but they can't alone be blamed. all of them are pegged to the constantly inflating US Dollar - which totally built on debt.

When there is a boom in real estate, so too will there be a bust.

I hope those developers have built their buildings high enough, so that the bankrupts can have a "good experience" when they jump out from windows when the markets finally crash.



redbean said...

it is natural and maybe good that every individual looks after his own interest, takes good care of himself. and when there is excess capacity, renders help to others.

but from an institution point of view, especially large organisations or govt organisations, they cannot be selfish. each shall strive to play its role but be mindful that it does not destroy the whole at the same time.

the govt wants to sell its land at its best price. developers do not care what is the price as long as they can make profits. they would not even mind if the price shoots through the sky as long as someone is going to pay for it. the natural rule of business and profits.

but by so doing, because each institution is looking after its own interest, ie profits, they forgot their other responsibilities. and eventually it will destroy the whole system.

the property market, and the stockmarket and all markets will crumble if not managed for the good of the whole nation but just for the profit of a particular institution/organisation.

as an eg, the stock market can keep on bringing stocks for listing. if the market has an appetite for 100 stocks or derivatives, any additional stock will be left on the shelf. an additional 100 stocks will mean 100 left behind.

but the stock exchange needs to look after its bottom line. doesn't matter even if 1000 stocks are left on the shelf. their main income is for stock listing.

and if all the stocks are left on the shelf, they would not mind developing more products. and the game continues with more and more stocks left on the shelf.

the outcome is certain death for the investors stuck with unwanted stocks.

Matilah_Singapura said...

You're neglecting one thing: the customer is king. He creates the demand, because it is his "need" which requires "satisfaction".

His "need" is a value to him, and so he determines what he is willing to pay. The supplier of that need also determines what he wants to sell for, and thru negotiation and trade the "need" clears in the market at a market clearing price.

In the above example, all agents are behaving to satisfy their needs - i.e. they are pursuing their own self-interest.

Everyone acts selfishly, all of the time. When you say "regulation", by what standard and what arbitrary power gives the "regulator" the right to determine how individuals may behave in a voluntary trade?

By my standards absolutely none. No one has the right to interfere with one-on-one voluntary relationships.

redbean said...

i would have agree with you if there is a perfect and efficient market. unfortunately ours is a grossly imperfect and inefficient market.

one of the key roles of the regulators is to prevent a cornered market, and also to prevent manipulation by the big boys. if the market is actually cornered by the big boys, then all the free play of market forces are distorted. and it is no longer a market as it is expected to be.

Matilah_Singapura said...

Markets are never "efficient" neither are they "perfect" - because those are just concepts used to theorise on what "ought to be".

Markets are a spontaneous order. At best human understanding can only conceptualise them as abstracts.

I mean, how does one put spontaneous order into words??

You lose the whole thing immediately. We use words to communicate or explain ideas, but like all spontaneous order, markets need to be experienced directly.

redbean said...

the closes you get to a free market is the american stockmarket. big enough and enough number of players.

in the early 1990s, we have some kind of a free stockmarket. funds pouring in from all over the world. many fund managers and many retails. it was a full market forces at work.

but then the artificiality of the market soon reappear when all the rules were introduce to clamp down on the feverish trading activities. and they hanged the market half way, kicking violently to death.

from the economic perspective, many things are still describable by words as economic theories are humanly created.

words will find greater limitations in the spiritual realm of things.